Question 1

Table 4-1
 
-Refer to Table 4-1.If the market consists of Michelle,Laura,and Hillary and the price falls by $1,the quantity demanded in the market increases by

Accepted Answer

A)   2 units.
B)   3 units.
C)   4 units.
D)   5 units.E) A) and B)
F) A) and C)

Question 2

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk,which is used to make lattés,and scientists discovered that coffee prevents heart attacks?

Accepted Answer

A)   Both the equilibrium price and quantity would increase.
B)   Both the equilibrium price and quantity would decrease.
C)   The equilibrium price would increase,and the effect on equilibrium quantity would be ambiguous.
D)   The equilibrium quantity would increase,and the effect on equilibrium price would be ambiguous.E) A) and B)
F) C) and D)

Question 3

Which of the following is not a characteristic of a perfectly competitive market?

Accepted Answer

A)   Sellers set the price of the product.
B)   There are many sellers.
C)   Buyers must accept the price the market determines.
D)   All of the above are characteristics of a perfectly competitive market.E) C) and D)
F) A) and D)

Question 4

Table 4-3
 
-Refer to Table 4-3.If these are the only four buyers in the market,then the market quantity demanded at a price of $2 is

Accepted Answer

A)   0 units.
B)   3.5 units.
C)   12 units.
D)   14 units.E) B) and C)
F) None of the above

Question 5

A decrease in the price of sugar will shift the supply curve for cookies to the right.

Accepted Answer

A) True 
 B)False

Question 6

Figure 4-18 
-You have been asked by your economics professor to graph the market for lumber and then to analyze the change that would occur in equilibrium price as a result of recent forest fires in the west.Your first step would be to

Accepted Answer

A)   decide which direction to shift the curve.
B)   decide whether the fires affected demand or supply.
C)   graph the shift to see the effect on equilibrium.
D)   None of the above is correct.E) All of the above
F) A) and D)

Question 7

Cocoa and marshmallows are complements,so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

Accepted Answer

A)   an increase in consumer income
B)   a decrease in consumer income
C)   greater government restrictions on agricultural chemicals
D)   fewer government restrictions on agricultural chemicalsE) A) and D)
F) A) and C)

Question 9

Today's demand curve for gasoline could shift in response to a change in

Accepted Answer

A)   today's price of gasoline.
B)   the expected future price of gasoline.
C)   the number of sellers of gasoline.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 10

Figure 4-15 
-Refer to Figure 4-15.At a price of $35,there would be

Accepted Answer

A)   a shortage,and the price would tend to rise from $35 to a higher price.
B)   a surplus,and the price would tend to rise from $35 to a higher price.
C)   excess demand,and the price would tend to fall from $35 to a lower price.
D)   excess supply,and the price would tend to fall from $35 to a lower price.E) B) and D)
F) A) and D)

Question 11

You lose your job and,as a result,you buy fewer iTunes music downloads.This shows that you consider iTunes music downloads to be a(n)

Accepted Answer

A)   luxury good.
B)   inferior good.
C)   normal good.
D)   complementary good.E) A) and B)
F) A) and C)

Question 12

In a market economy,

Accepted Answer

A)   supply determines demand and demand,in turn,determines prices.
B)   demand determines supply and supply,in turn,determines prices.
C)   the allocation of scarce resources determines prices and prices,in turn,determine supply and demand.
D)   supply and demand determine prices and prices,in turn,allocate the economy's scarce resources.E) B) and D)
F) All of the above

Question 13

If baked potatoes and sour cream are complements,then an increase in the price of sour cream decreases the demand for baked potatoes.

Accepted Answer

A) True 
 B)False

Question 14

An increase in the price of maple syrup will decrease both the equilibrium price and quantity in the market for pancakes.

Accepted Answer

A) True 
 B)False

Question 15

A competitive market is one in which there

Accepted Answer

A)   is only one seller,but there are many buyers.
B)   are many sellers,and each seller has the ability to set the price of his product.
C)   are many sellers,and they compete with one another in such a way that some sellers are always being forced out of the market.
D)   are so many buyers and so many sellers that each has a negligible impact on the price of the product.E) A) and B)
F) A) and D)

Question 16

A decrease in the price of a complement will shift the demand curve for a good to the left.

Accepted Answer

A) True 
 B)False

Question 17

Baseballs and baseball bats are substitute goods.

Accepted Answer

A) True 
 B)False

Question 18

Figure 4-1

-Refer to Figure 4-1.If these are the only two consumers in the market,then the market quantity demanded at a price of $12 is

Accepted Answer

A)   3 units.
B)   6 units.
C)   9 units.
D)   12 units.E) A) and B)
F) A) and C)

Question 19

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Accepted Answer

A) True 
 B)False

Question 20

Nemo rents 5 movies per month when the price is $3.00 per rental and 7 movies per month when the price is $2.50 per rental.Nemo's demand demonstrates the law of

Accepted Answer

A)   price.
B)   supply.
C)   demand.
D)   income.E) All of the above
F) C) and D)

Exam 4: The Market Forces of Supply and Demand

Figure 4-18 -You have been asked by your economics professor to graph the market for lumber and then to analyze the change that would occur in equilibrium price as a result of recent forest fires in the west.Your first step would be to

Correct AnswerverifiedShow Answer

Cocoa and marshmallows are complements,so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

Correct AnswerverifiedShow Answer

Table 4-1 -Refer to Table 4-1.If the market consists of Michelle,Laura,and Hillary and the price falls by $1,the quantity demanded in the market increases by

Correct AnswerverifiedShow Answer

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

Correct AnswerverifiedShow Answer

Figure 4-15 -Refer to Figure 4-15.At a price of $35,there would be

Correct AnswerverifiedShow Answer

If baked potatoes and sour cream are complements,then an increase in the price of sour cream decreases the demand for baked potatoes.

Correct AnswerverifiedShow Answer

A competitive market is one in which there

Correct AnswerverifiedShow Answer

Baseballs and baseball bats are substitute goods.

Correct AnswerverifiedShow Answer

Figure 4-1 -Refer to Figure 4-1.If these are the only two consumers in the market,then the market quantity demanded at a price of $12 is

Correct AnswerverifiedShow Answer

A decrease in the price of sugar will shift the supply curve for cookies to the right.

Correct AnswerverifiedShow Answer

An increase in the price of maple syrup will decrease both the equilibrium price and quantity in the market for pancakes.

Correct AnswerverifiedShow Answer

Today's demand curve for gasoline could shift in response to a change in

Correct AnswerverifiedShow Answer

In a market economy,

Correct AnswerverifiedShow Answer

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

You lose your job and,as a result,you buy fewer iTunes music downloads.This shows that you consider iTunes music downloads to be a(n)

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Table 4-3 -Refer to Table 4-3.If these are the only four buyers in the market,then the market quantity demanded at a price of $2 is

Correct AnswerverifiedShow Answer

Nemo rents 5 movies per month when the price is $3.00 per rental and 7 movies per month when the price is $2.50 per rental.Nemo's demand demonstrates the law of

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk,which is used to make lattés,and scientists discovered that coffee prevents heart attacks?

Correct AnswerverifiedShow Answer

A decrease in the price of a complement will shift the demand curve for a good to the left.

Correct AnswerverifiedShow Answer

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